December 2009

Comcast-NBC deal finds donors converging with Obama's principles

The proposed merger of Comcast and NBC Universal will be the first big test of the Obama administration's stance on the hot-button issue of media consolidation. It could also put the Obama administration and Democrats in Congress at odds with a few of their largest supporters. The deal faces strict scrutiny by federal regulators appointed by President Barack Obama, who voiced concern about increasing media consolidation on the campaign trail. But the companies under scrutiny in the biggest media deal since the Time Warner-AOL merger are helmed by executives who have been long-time contributors of the Democratic party and have other ties to the Administration.

Cross-Ownership Changes: Wait Till Next Year

While Federal Communications Commission Chairman Julius Genachowski has said he feels the media's pain and has opened the agency's own inquiry into the state of journalism, the FCC won't be taking any action on newspaper-broadcast cross-ownership for many months. Chairman Genachowski also has asked the courts not to weigh in until the FCC has had time to reconsider the issue. In a letter to the Third Circuit, FCC General Counsel Austin Schlick said the decision will be superseded by the 2010 review. He cautioned further that the current petition does not represent the views of the FCC anyway since three of the five members were not on the commission when the final order came out in 2008. Schlick's letter also mentioned that one of those commissioners, Michael Copps, voted against it. Schlick told the court that there was a method in not getting ahead of the broader 2010 review: "It would be difficult to justify second-guessing decisions that were made based on the record in the 2006 proceeding, when Commission staff are simultaneously gathering an updated record concerning the same issues." For broadcasters, though, it means a further delay after years of regulatory uncertainty. The commission's ownership rules have been in some form or another of regulatory limbo since 2003, when a more deregulatory rule change by then-FCC Chairman Michael Powell was stayed by the Third Circuit after it was challenged by consolidation foes.

Cisco Says It Has Won Control of Tandberg

Cisco Systems, the network equipment maker, said on Friday that it had control of more than 90 percent of the Norwegian videoconferencing company Tandberg, and would buy out remaining shareholders. Cisco said it had 89.1 percent acceptance for its offer of 19 billion Norwegian kroner, or $3.4 billion, in addition to the 2 percent of Tandberg, or 2.2 million shares, that it bought in November. The companies also said on Friday that the United States Justice Department had requested additional information about the deal.

FCC Sends Verizon Some Questions about Termination Fees and Web Access

The Federal Communications Commission has sent a letter to Verizon Wireless asking the company about recent press reports indicating that the carrier has 1) doubled the "early termination fee" (ETF) it charges new customers purchasing an "advanced device" if they disconnect service prior to completing the contract term and 2) charged customers for minimal, inadvertent use of Verizon's Mobile Web service.

The FCC has 9 questions for Verizon that it has requested the company reply to by December 17, 2009. What information about the higher ETF does Verizon Wireless provide to prospective customers, and when? How can customers learn about the formula for prorating the ETF? Are there any trial periods in which customers may discontinue service without being subject to the increased ETF? What is the rationale for the increase? Is the increase related to the wholesale price of "advanced devices" charged by equipment manufacturers? Why isn't the ETF prorated? Are month-to-month service plans available consumers purchasing "advanced devices"? When does Verizon Wireless charge usage fees for access to Verizon Mobile Web? Can a customer re-program keys that provide for one-press access to various Mobile Web services to disable that function?

Ensign Wants More Spectrum for Wireless Broadband

On Friday, Sen John Ensign (R-NV), the ranking member of the Senate Communications Subcommittee, said the US must act soon to meet the increasing demand for more spectrum: "Our nation is on the verge of a wireless spectrum shortage. As evidenced by the tremendous success of smart phones, demand for wireless broadband devices and services is exploding. If the United States does not act soon to meet the increasing demand for more spectrum, we risk falling behind other nations in developing new technologies." Sen Ensign said he commended the Federal Communications Commission for taking a "first step toward allocating more spectrum for wireless broadband. This is a vitally important conversation that our nation must have now if we are to stay at the cutting edge of innovation. I also applaud the FCC for recognizing the important public interest value of free over-the-air broadcast television. I look forward to working with my colleagues in Congress, the FCC, the NTIA, and all public and private spectrum stakeholders to allocate more spectrum for wireless broadband."

Google's new open: Spectrum

Through its lobbying of the Federal Communications Commission in 2007, Google ensured that at least one mobile operator would have an open access network on the 700 MHz band. Its advocacy of the Android platform has pushed many operators to adopt their first open-source operating systems and open application distribution platforms. But Google is pushing for one more type of open: open spectrum. Vint Cerf, Google's chief Internet evangelist, is advocating a policy of spectrum sharing among operators. At the Open Mobile Summit, Cerf said that new modulation schemes in wireless would allow for the simultaneous occupation of the same spectrum by multiple parties, making the notion of a single operator/single license obsolete. For instance, orthogonal frequency division multiplexing access, which is the basis for WiMax and long-term evolution, abandons the notion of a single wide channel and instead splits a band into multiple sub-channels or tones, which could be used to dynamically create channels of varying widths. By tweaking the technologies already in development today for multiple entities, the industry could make a huge leap forward in more efficiently utilizing public spectrum resources, Cerf said.

The Magic of the Microcell

There's something different about AT&T's new Microcell from the other femtocells being offered in the U.S. by Verizon Wireless and Sprint. Not only does the Microcell support 3G data, but AT&T isn't charging its customers to use it, which could make it the ultimate extension of AT&T's dual-network strategy to make wireless data ubiquitous without straining the capabilities of its high-speed packet access network. By using a femtocell, a data connection bypasses the two most congested parts of the wireless network: the radio access network — which not only has built-in spectrum, deployment and maintenance costs, but is inherently limited by the amount of spectrum an operator owns — and backhaul transport, which is dependent on expensive fiber links to scale. Instead, the femtocell uses a customer's own home or business broadband connection to tunnel that traffic over the public Internet directly to the network core. And as femtocell technologies improve, the majority of traffic that is bound for the Internet can be offloaded at the femtocell itself, bypassing the operator's network entirely.

Apple's Game Changer, Downloading Now

As the Apple App Store evolves, it is changing the goals of developers, bolstering sales of iPhones and causing competitors to overhaul their product lines. Thanks in large part to the iPhone, introduced in 2007, and the App Store, which opened its doors last year, smartphones have become the Swiss Army knives of the digital age.

Competition driving smartphone takeover

While smartphones have captured the most industry buzz for the past couple of years, standard cell phones have always captured the majority of market share. This is changing at a rapid pace, however, with smartphone sales poised to overtake standard mobile phones by 2012, according to Infonetics Research's biannual mobile/Wi-Fi phones report. Smartphones are on track to post a 14.5% increase in the number of units sold worldwide in 2009 and a 21% compound annual growth rate from 2008 to 2013, which is significantly better than any other mobile phone segment.

Resolving Issues in the Special Access Rulemaking

The Federal Communications Commission invites interested parties to comment on the appropriate analytical framework for examining the various issues that have been raised in the rulemaking proceeding on special access services pending before the Commission. Comments are due on or before January 19, 2010 and reply comments are due on or before February 17, 2010.

Benton

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